Small business owners have their say on risks, challenges and opportunities in our micro-SME survey
- Based on research commissioned by QBE, 79% of Australian micro small businesses believe business insurance provides peace of mind in their day-to-day operations
- 81% feel completely or mostly protected, thanks to insurance coverage
- 83% express confidence in their current level of protection
Small businesses with up to 10 employees (micro-SMEs) form the backbone of Australia’s economy. They embody resilience, diversity, and an unwavering drive to succeed in the most challenging economic landscapes.
From chasing growth opportunities to navigating cash flow, business owners rely on more than hard work to succeed – they need partners who understand their needs and ambitions. That’s why QBE is dedicated to addressing the challenges business owners face and providing insurance solutions for small businesses.
In December 2024, we surveyed 1,010 Australian micro-SMEs and sole traders to get under the hood of their operations. We also heard their views on business insurance and its role in safeguarding what matters most.
Here’s a snapshot of our findings.
What types of businesses were surveyed?
Of the people surveyed, we found that 42% were sole traders and 51% were women.
Business types were varied, with the top five industries being retail trade (14%), health care and social assistance (12%), professional, scientific, and technological services (11%), food services (7%), and consulting (6%).
By analysing the survey data, patterns emerged around the characteristics of Australian micro-SMEs. From ambitious tradies looking for growth opportunities, to seasoned professionals seeking flexibility, these business owners bring varied skills, goals and motivations.
“It’s clear that small business owners all look at insurance differently. It’s important for us to recognise this and create insurance offerings that cater to a diverse range of needs,” said QBE’s Jon Facer, Head of Micro-SME, Consumer.
The following four personas highlight the diversity of Australia’s micro-SME community, representing up to 2 million people.
Lifestyle Seekers
This is an owner-operator who thrives on flexibility, embracing a work-life balance in line with their personal goals. A typical Lifestyle Seeker looks like a Baby Boomer living in NSW, operating their business for 6-9 years.
Likely to run a venture such as niche financial planning or gourmet catering, they appreciate the opportunity to follow their passions on their terms.
They value the peace of mind that business insurance provides, allowing them to achieve a good work-life balance. With 62% of newer businesses feeling confident in their coverage, insurance aligns with their goals of maintaining stability while enjoying their autonomy.
Aspirational Entrepreneurs
A business owner driven to expand their enterprise to achieve long-term success. Typically, this looks like a Millennial based in NSW, who’s been running their business for 1-5 years.
Often found in building and trades, niche retail, or specialty food and beverage distribution, they’re motivated by the desire to grow.
These entrepreneurs use business insurance as a tool to confidently look at growth strategies, like hiring staff (35%) or investing in new equipment (42%). They see business insurance as an enabler of growth, not just a safety net.
Safety-Net Seekers
This is a risk-averse business owner driven by the need to build cash reserves and minimise risks. Surprisingly, this looks like a Gen Z in Victoria who has been operating for 1-5 years.
These entrepreneurs are commonly found in ventures like boutique digital marketing or web design agencies, and small-scale tech support services. They adopt conservative strategies to ensure their business remains stable.
Driven by financial security, they view business insurance as a critical layer of protection. But many rely heavily on savings, leaving gaps in coverage. With 24% unable to afford any financial setback, the benefits of business insurance are tangible.
Passion-Driven Creators
An ambitious business owner, fuelled by a deep passion for their craft of cause. This group is typically based in WA, with less than a year of operation.
Often seen running community-based events, not-for-profit or personal coaching, or services for the NDIS, their work reflects their personal values to make an impact while building a fulfilling career.
With 79% of micro-SMEs citing business insurance as essential for peace of mind, this persona benefits from cover that promotes long-term confidence.
How micro-SMEs manage small business insurance
A promising 63% of business owners surveyed review their insurance coverage yearly, and 21% review it every 2-3 years. Yet despite 42% of businesses experiencing growth over the past three years, 58% said their insurance coverage had remained the same.
“Insurance is a part of risk mitigation which is why it’s important to make sure your coverage accurately reflects the risks that face your business. Regularly checking your policy limits is a good way to ensure ongoing alignment,” adds Facer.
Notably, 24% of businesses said they couldn’t afford any financial setback and a further 29% could only withstand a setback of up to $10,000. With disruptions like legal liabilities often exceeding these amounts, adequate small business insurance – particularly public liability insurance – is vital.
Related article: Public liability insurance guide for small business
While 79% of businesses feel completely or mostly protected with business insurance, 58% say insurance gives them peace of mind in their day-to-day operations.
What are their challenges?
The greatest challenges for micro-SMEs are:
- an increase in operational costs (42%)
- not enough business or customers (31%)
- problems with cash flow (28%)
- business stability (27%)
- managing client expectations (27%).
Business owners said they manage uncertainty with strategies that include increasing savings reserves (38%), diversifying product or service offerings (25%), implementing safety and compliance protocols (22%), and establishing emergency and contingency plans (21%).
What are the opportunities?
More than half of insured businesses surveyed (52%) feel more confident about taking risks with their business operations. For example, 42% would like to invest in new equipment or technology, 37% would like to offer new products or services, and 35% want to hire new staff.
“Having adequate insurance means that as your business grows you can feel secure in the knowledge that, should the unforeseen happen, you will not be worse off financially.”
Insurance considerations for business owners
As a micro-SME, your insurance needs are as unique as your business. It can help to align your coverage with your goals.
Explore all available covers
QBE Small Business Insurance has a range of covers including public liability insurance as standard, so you can pick and choose what’s right for your business. Select the extras you need and none you don’t.
For example, if you work from a shopfront or office, you may like to add business building and contents insurance to provide cover for physical damage to your premises and the equipment inside. Or there’s portable items coverage to protect essentials like laptops or tools when used offsite. Many other covers are available to suit your business needs.
Get protection for your business
Disruptions like storms or fires can force you to close temporarily. Business interruption insurance can cover loss of revenue and essential expenses during these periods, so you can recover effectively.
Regularly assess your insurance
Ensure it aligns with changes in your business, such as adding new staff, services, or assets. For example, public liability insurance can have limit caps of up to $20 million while some contracts stipulate more.
Prioritise insurance that provides protection against early-stage risks
Unexpected legal or operational disruptions could have a big impact on your bottom line, so make sure you protect your business – particularly in the early stages.
Use your insurance as a tool to chase opportunities
Small business insurance could give you the confidence to pursue opportunities, such as entering new markets or launching new products.
Learn about QBE Small Business Insurance
What does the future look like for Australian small businesses?
Judging by what these micro-SMEs told us, the future looks promising, with many businesses and sole traders having solid aspirations over the next 3-5 years.
The top aspirations are to increase profitability (50%), increase their customer base (43%), stabilise cash flow (42%), and expand products or services (23%).
Based on this research, it appears positive momentum is building for Australian micro small businesses and sole traders. We trust that sentiment will continue into 2025 and beyond.
For more information, download the full report: Adapt, protect and thrive: How micro-SMEs navigate risk and opportunity.
This QBE Small Business Insurance is issued and underwritten by QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFSL 239545). Any advice provided is general only and has been prepared without taking into account your objectives, financial situation or needs and may not be right for you. To decide if this product is right for you, please read the QBE Small Business Insurance Policy Wording.
The survey data used in this report has been conducted using an online survey administered by Pure Profile. All figures, unless otherwise stated, are from Pure Profile. The total sample size was 1,010 sole traders and micro-SME owners (18 years+) with up to 10 employees. Fieldwork was undertaken between 2 and 17 December 2024.
This content is brought to you by QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFSL 239545) (QBE).
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